What does the word ‘slum’ conjure in your mind? Lots of sad, very poor people, squashed together, living in abject misery? Despite my South Asian origins and work in developing countries, more often than not I would unquestioningly accept that stereotype.
And what prospect could there be for redeveloping a slum in which both slum dwellers and developers may benefit? I could not imagine how this would be possible.
But this is one of the case studies that I was exposed to along with 80 other business leaders from around the world, during a fascinating week at the new Harvard Business School Campus in Mumbai. In this report I want to share some learnings from the case study on the Dharavi slum in Mumbai, which included a visit to the slum.
Mumbai is India’s most dynamic and wealthiest commercial city, boasting a significant degree of world class business talent and of course Bollywood. Property prices in the city are amongst the highest in the world. The city also has the both the largest, absolute number and proportion, of slum dwellers in the world, with close to half the population (ie around 6 million people) living in slums. Of these, Dharavi is the largest. It is home to about 700,000 people, living in an area of around 2.23 sq kms. The size of the average dwelling is 100 sq feet – measure it out and you will find it is an area which is not much bigger than a Queen size bed.
It is a challenge for those living in the West to understand how one would simply survive in this environment. Astonishingly though, from the positive energy many of the people in Dharavi showed, they seemed almost to be thriving. So how can this be possible? At the risk of simplification, may I suggest three key factors:
- Where people have come from
- The environment of the slum in comparison
- People’s hopes and aspirations for the future
Many of the slum dwellers in places like Dharavi are economic refugees from neighbouring rural areas where life, especially for the millions of landless labourers, is incredibly harsh and with seemingly no prospects for a better future. Following the Harvard course, I spent some time touring rural areas in the neighbouring state of Rajasthan. It is very arid, with many still performing work in fields or herding livestock, much as they did in medieval times.
Their accommodation is at best similar to that of the cattle herders of Samburu Village in Kenya (please see my post: ‘The Most Contented People on Earth, but are they the Happiest?’) . But unlike the Kenyan villagers, the landless labourers in India do not own their livestock, nor do they have any security of tenure. In this sense, even the less ambitious lack the contentment of the villagers of Kenya. The more ambitious and entrepreneurial are those who move to the cities in search of escape from multi-generational poverty and servitude.
The slums in this sense are a half-way house for those searching for this escape. At its worst, the accommodation is similar to what they are used to. And they probably have access to (stolen) electricity, better basic medical services and much better income earning prospects. Income earning is not through secure paid employment with fringe benefits. It involves doing physically gruelling work, in tough, unsanitary conditions and with limited OH&S. But at least there is work as well as small business opportunities.
The slums are a hive of entrepreneurial activity. An extraordinary array of small industries operate from tiny premises including textile dyeing, recycling, metalwork and food manufacture. There are also a fantastic number of services ranging from the people who put a stool and a mirror outside their front doors and provide haircuts and beauty treatments to a never ending supply of street vendors. One study suggested that Dharavi has around 5,000 informal businesses. These businesses produced goods worth about $600 million annually, or more than the output of several newly established government sponsored Special Economic Zones around the country.
Some of these entrepreneurs become millionaires, build two-three storey dwellings within the slum and drive Mercs. That said, I do not want to glorify life in slums. Many are destined for a life of continued gruelling work. They lack financial security and good health care. They are vulnerable to exploitation by more powerful leaders and live in a grossly polluted environment – all of which limit one’s ability to thrive.
But there is far more industriousness, entrepreneurialism, dynamism and above all hope for a better future in a slum, that is masked by the physical squalor. And there is a very strong sense of community, long lost in our more sanitised, luxurious but sometimes very lonely, Western environments. There is a continuous interaction between all age groups, with the elderly in particular having a chance to play an important role in day to day life.
How does this translate into property redevelopment opportunities? As part of the case study, we met the remarkable Mukesh Mehta who has been working on the Dharavi Redevelopment Project since 1997.He and his team guided us through our visit to the slum. Mehta’s plan involves in essence a public private partnership. Developers would be responsible for building infrastructure such as roads, schools and hospitals. The infrastructure would be of the quality to attract the middle class to the area. The government or charitable trusts would be responsible for maintaining the infrastructure once built.
‘Registered’ slum dwellers would receive new apartments in the development at no cost in return for giving up their ‘squatting rights’ and providing their support. The developers in turn would have the right to build additional apartments for private sale. They would pay a fee to the government for the development rights, which would include the right to build higher rise buildings on a particular plot size, than normally allowed.
On paper, the potential profitability to developers is over half a billion dollars in the case of Dharavi. And on some estimates if this creative approach was applied to all the slums in Mumbai, the state government would stand to gain nearly $25 billion. While the magnitude of these numbers reflect Mumbai’s very high land values, the approach nevertheless highlights the potential to involve the private sector in profitably redeveloping a slum, while benefiting the slum dwellers and government.
For more than a decade, Mehta’s team has worked tirelessly to present their plans, get input and approval from the thousands of stakeholders involved. Last year they came very close but they have yet to conquer finally the political deadlock that stymies many good initiatives in India. Whether the advent of the new Modi government makes any difference remains to be seen.
Neverthless, the entrepreneurial energy of Dharavi and the creativity and commitment of Mehta’s team continue to shine through. There is a lot more energy in slums and hope for the long term future of their inhabitants, than I ever imagined.